Many companies operate today in industries containing significant risk and high-stakes gambles. Global competition, disruptive technologies and rapid emergence of new business models have shortened the view of the strategic horizon and cut margins. In response, executive leaders have exercised closer, tighter management of cash while continuing to invest on the margins to build business and competitive advantage.
In a dynamic, disrupted, knowledge-based global economy — where major shifts happen quickly — many firms such as GE, 3M and eBay have discarded earlier forms of systematic, Industrial Age strategic planning. But while leaders feel urgency to move faster, substituting short, incomplete sketches of plans for longer, more detailed and voluminous ones will not create better outcomes.
Organizations can build the capabilities suited to the modern global economy by introducing fresh planning approaches and marrying them to a complementary rapid-results implementation process. The rapid-results approach quickly identifies the key assumptions on which a strategy pivots, and tests them immediately through projects to develop adaptive-change capabilities.
A company can change the game it plays, shape its competitive landscape and iteratively test its new capabilities against current challenges and opportunities. New capabilities will emerge and drive specific business results and outcomes, stronger than slow and costly “if you build it, they will come,” wait-for-the-payback training approaches. These rapid-results efforts can confirm short-term results and enable rapid course correction.
To create successful adaptive organizational change capabilities, learning leaders should:
Create transformational leadership. Transformational leaders will:
• Define new sets of priorities.
• Reshape fundamental attitudes and assumptions of employees and staff.
• Create a common language.
• Drive urgency to attain the firm’s new goals.
These are the leadership capabilities the CEO, CLO and other leaders can cultivate to redefine a business. To shape fundamental attitudes and assumptions in key staff members, leaders must make clear demands to deliver specific near-term results — creating a winning trajectory that shows up in short and repetitive cycles. Affirming evidence and behavior examples enriches how the organization defines transformational leadership. Leaders who run rapid-cycle projects test new assumptions in line with new priorities and support employees with structured coaching and action-learning experiences.
Set strategic direction and engage others. Executives can clearly set direction by naming the threats an organization faces and describing where it needs to go. The act of engaging others and the degree and pace with which leaders engage may be more important than the specific direction. Undertaking this process with clear movement, transparency and purpose mobilizes rich engagement, broad contributions and commitment. People more readily embrace change they participate in shaping.
Start now to execute quickly on critical projects. In a short delivery cycle world, great ideas executed slowly may fail. Organizations rocked by changes can structure capability-building programs to deliver specific, tangible and strategically relevant results quickly, and build capability in overlapping 100-day cycles. Working this way creates urgency for project completion and enables rapid achievement of key results before the external environment changes.
Define key capabilities needed and success measures based on vision. Key capabilities include individual roles, group-, team-, unit-level and process/system capabilities as well as competency models for particular roles. A comprehensive organizational model can define these holistically to show how the key roles will interact and what processes they will use to deliver needed performance against the named challenges.
“Creating capabilities doesn’t simply mean lots of training; that approach doesn’t work,” said Karol Rose, chief knowledge officer for FlexPaths, a software products and services company. “Companies need to engage employees creatively, in iterative bite-sized projects, to test that development, execution and implementation delivers against high-level strategy and business goals.”
Executing initial projects quickly can inform key capabilities and develop an organization’s ability to measure results.
A Playbook for Results
Employees need to know where a company is going, and have clear evidence of intent and commitment about major opportunities and major risks. A capabilities architecture, or playbook, spells out what’s needed to win, and how employees will get there, which is more motivating than naming planned aspirations. Learning leaders, working in partnership with line leaders, can tie delivered results to specific capabilities the organization is building and work to keep the results and capabilities side by side.
Difficult economic conditions, pervasive uncertainty and great opportunities challenge leaders to intentionally prepare their organizations for disruptive change. Creating leadership capability, setting direction, starting with results, defining capabilities required and orchestrating holistic program investments together as a trajectory of results will orient organizations for success.
CASE STUDY: New York Presbyterian Hospital
In 2011-2012, NewYork-Presbyterian Hospital (NYP) made the U.S. News & World Report “Honor Roll of America’s Best Hospitals” for the 11th time. More physicians from NYP were named to the “America’s Top Doctors” list than from any other hospital in the nation. But for all its accolades, NYP faces challenges common to other hospitals in a changing health care industry.
To address these challenges, NYP’s senior leadership team has focused on front-line managers to build resilience. The organization has started with these leaders because they supervise significant numbers of NYP staff and are major influences regarding staff capabilities, productivity, turnover, morale and ultimately, patient satisfaction. These front-line leaders represent the greatest impact and highest leverage population with whom to begin building capability to win.
In 2011, NYP’s leadership steering team initiated Build Tomorrow’s Leadership, an 18-month, nomination-based program to build front-line skills in complex problem solving, collaboration, communication, decision making and other management capabilities. The program builds critical change-management capabilities and a uniform baseline for management thinking and practice within the hospital system.
Thirty front-line managers from all campuses, multiple job sites and functions were named to participate in the program, while maintaining their daily job responsibilities. The program included three phases:
Phase one: Development planning and leadership workshops: Participants use 360-degree feedback, performance data, input from managers and self-reflection to create individual development plans. These plans guide learning in 12 semi-monthly classroom workshops. In the workshops, a curriculum using realistic case studies and business situations challenges participants to analyze, decide and act individually and collaboratively. These sessions prepare participants to create positive business impact during the action learning phase.
Phase two: Action learning: Participants work in project teams to apply the knowledge, skills and abilities acquired in the workshops to strategically important hospital projects.
Phase three: Management sessions: Participants partner with top administrative and clinical management in sessions to address enterprise-wide issues.
Throughout the program, each participant works closely with a designated senior leader as a mentor, and at program conclusion, each receives a second 360-degree assessment. To communicate the urgency and importance of the work, and to maintain alignment, the directors of these managers meet to review progress and address participants’ developing capabilities.
NYP expects this program to:
• Generate significant outcomes from the in-program projects and action-learning work and significantly enhance key front-line managers’ capabilities.
• Build collaboration across hospitals, departments, functions and units.
• Enable new streamlined and agile decision making and execution capabilities.
• Build common awareness of the “NYP Way” of management practice and leadership.
• Stimulate innovative and strategic solution development on NYP and industry issues, and broaden the overall organization’s agility, resilience and dynamism on the front line.
Through this program, as the year progresses, NYP will be building baseline leadership and management practices within the leadership core of the organization. Participants will be more knowledgeable on the industry and strategic hospital issues and well-versed through work with their peers on how, as an institution and as managers, they meet important challenges.
As the dramatic disruptions in health care continue, NYP expects this program to create transformational leadership and infuse strategic thinking at the front line in its complex and demanding hospital environments.
CASE STUDY: Dramatic Growth at IMGC
In 2002, Intermagnetics General Corp. (IMGC) was a small portfolio company of about $150 million in annual revenue, with an array of loosely related technology businesses. Its small size required restructuring to strip out business complexity, improve performance and enable growth.
In 2003, the leadership team focused on strategies and technologies to define IMGC as a medical device company. During the next few years, developing specific adaptive-execution capabilities successfully drove IMGC’s growth and ultimate sale to Philips Healthcare at a premium. Here’s how IMGC did it:
Intentional support for acquisitive growth: IMGC needed dramatic inorganic growth. Given its size — as well as its unique technologies — acquiring and integrating complementary companies would rely on key personnel. IMGC called these key people the National Guard — people called up from their regular roles on short notice to pursue due diligence, plan and lead integration. To support these experts, the company constructed a systematic, detailed end-to-end playbook of policies, practices and tools to evaluate and integrate acquisitions. Facilitated by the vice president of HR and the head of corporate development, National Guard members shaped this playbook, training together to vet and practice its approaches. After a year of preparation, the National Guard was deployed successfully at a major acquisition in 2004.
Best bosses: Staffing was tight, and senior leadership knew the company would need every person operating at maximum productivity. To capture hidden reserve productivity, the vice president of HR sponsored and introduced a formal approach to create more effective engagement between managers and key staff.
Learning for key roles: IMGC HR orchestrated with line leaders a targeted evaluation of its entire employee population to identify the roles critical to successful execution. The industrial landscape was changing quickly in its core markets, and IMGC was disadvantaged as an “employer brand” due to its small size. The company outlined and built capabilities in core technical and integrative roles, detailing values and technical competencies, which facilitated hiring and helped to create a more resilient organization. This work was integrated with performance-management processes using the learning to drive increased capabilities.
Culture and values: IMGC also identified the specific culture and values needed to support its strategy. The company held workshops with all employees to develop common definitions of each value in practice — in the context of each employee’s work setting — including the CEO and his team.
During a period of several years, IMGC made a series of focused strategic acquisitions and internal investments to create growth. It demonstrated new capability to integrate these acquisitions, captured productivity gains and created a broader presence in its core markets. The work resulted in an increase in profitability, from less than 10 percent to more than 50 percent, with an 800 percent increase in stock price at the time of IMGC’s sale to Philips in 2006.
While IMGC’s sale was completed several years ago, the challenges it faced in the last decade remain universal, common to many small companies, or divisions of larger ones, that are competing in crowded markets and facing wars for talent. All must do more with less, need new capabilities, need to create more engagement and follow-through, need more raw innovation and have a short time in which to produce.
The key lesson is that an integrated organizational approach, married to a complementary rapid-results implementation process, can create the capacity for change to respond successfully to crisis and to seize critical opportunities.
Former Southwest Airlines CEO Howard Putnam says culture is key to long-term growth. Read about it here
Evan Smith is a senior partner at Schaffer Consulting, which specializes in organizational and cultural change. He can be reached at editor@CLOmedia.com.